Monday, October 15, 2012

Reverse Mortgages Costing Seniors their Homes

The very loans that are supposed to help seniors stay in their homes are in many cases pushing them out. Reverse mortgages, which allow homeowners 62 and older to borrow money against the value of their homes and not pay it back until they move out or die, have long been fraught with problems. But federal and state regulators are documenting new instances of abuse as smaller mortgage brokers, including former subprime lenders, flood the market after the recent exit of big banks and as defaults on the loans hit record rates.

Some lenders are aggressively pitching loans to seniors who cannot afford the fees associated with them, not to mention the property taxes and maintenance. Others are wooing seniors with promises that the loans are free money that can be used to finance long-coveted cruises, without clearly explaining the risks. Some widows are facing eviction after they say they were pressured to keep their name off the deed without being told that they could be left facing foreclosure after their husbands died.

Now, as the vast baby boomer generation heads for retirement and more seniors grapple with dwindling savings, the newly minted Consumer Financial Protection Bureau is working on new rules that could mean better disclosure for consumers and stricter supervision of lenders. More than 775,000 of such loans are outstanding, according to the federal government. Read more >>

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  1. Reverse mortgage is a nice financial instrument for the senior citizens in the country who do not have adequate retirement fund at their disposal and whose age is 62 or more.
    hud reverse mortgage

  2. Although a reverse mortgage has many potential benefits for senior homeowners, it also has its drawbacks. Reverse mortgages can have higher up front fees compared to other types of financing. As the homeowners get to retain the title of the home, they have the added burden of paying for insurance, taxes, maintenance and all other expenses related to the property. It is best to seek advice from a financial professional to see if a reverse mortgage is right for your situation.